Know If You Made a Profit:Job Costing Essentials

Educational Session Sponsors: Alert Management

SystemsAztec Tents Seitz, The Fresher

CompanyTopTec Products

Panelists:

Jonas Hutchison, CERP, Party Reflections, Charlotte, North CarolinaLacey Wright, CERP, Celebrations! Event Rentals & Tents, Roseville, California

William Pretsch, Mahaffey Tent Rentals, Memphis, Tennessee

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educational session sponsors

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Booth #3720

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Know If You Made a Profit:Job Costing Essentials

Educational Session Sponsors: Alert Management

SystemsAztec Tents Seitz, The Fresher

CompanyTopTec Products

Panelists:

Jonas Hutchison, CERP, Party Reflections, Charlotte, North CarolinaLacey Wright, CERP, Celebrations! Event Rentals & Tents, Roseville, California

William Pretsch, Mahaffey Tent Rentals, Memphis, Tennessee

What is Job Costing?

presented by

Jonas Hutchison, CERP

What is job costing?

A job-specific costing technique, used in situations where each job is different and is performed to the customer’s expectations.

Helps to determine if your pricing model works effectively.

Can be used as a training tool for both sales and operations.

Where to start? Labor – Consider those positions that touch your inventory. Those associates are considered your direct labor which is needed to compute your job profitability.

Supplies – Any supply that is used on your inventory as it goes in and out of your building is considered a direct cost. For example, hangers in the laundry, plastic wrap for your tents or chairs and chemicals in your laundry and kitchen. Also consider items needed while on a job site. Everyone of us has guys that are keeping hardware stores in business. These expenses need to be included if they are job related.

Where to start? - Continued

Transportation – We consider Maintenance, Repairs and Fuel a direct cost. Some may consider insurance, property tax and registration fee’s also, but we do not.

Inventory Wear & Tear – We define a rental life for every piece of inventory. Our rental life is defined by the number of rentals the item will typically get before it’s either broken (not repairable) or not up to quality standards.

Travel – Lodging, Meals, Airline, etc.

LaborWarehouseWe assign a cost to staging, cleaning, loading and unloading in our POSFormula: Qty Rented X Cost per Activity (Staging, Cleaning, Loading, Unloading)

FieldFormula: Number of Guys X Number of Hours X Average Fully Loaded Field Rate

ORIn your payroll system you may be able to assign a job name to each associate andthe hours worked on a particular job.

Calculating the Numbers

Calculating the Numbers Supplies (Use one of these methods for each department)

Two different ways to calculate:

First, get two numbers for each of your departments. The gross revenue for 2013 and the amount you spent on supplies for that department. Use the two numbers to get the amount of expense in every $ of revenue.

Formula: Cost of Linen Supplies / Linen Revenue

For example: $25,000/$250,000 = $0.10 which means for every $1 in revenue the department spends $0.10 in supplies.

Second method is specifically finding out what it costs to clean and restock each piece of linen. How much is the hanger, the bag, the tag, the chemicals, the water, etc.

Transportation

Add together your maintenance, repairs and fuel costs for 2013 and find out how many miles your trucks hauled during 2013.

Formula: Transportation Costs / Truck Miles

For example: $150,000/300,000 = $0.50 which means for every mile in truck usage the company spends $0.50 on the truck.

Calculating the Numbers

Inventory Wear & Tear

Formula: Purchase Price / Rental Life

For example: an item has a rental life of 50 rentals and has a purchase price of $100.

$100 / 50 = $2 cost per rental

Calculating the Numbers

Type Formula Total

Revenue Small table & linen order $700

Labor – WH Task Cost X Qty - $45

Labor – Field Hours X Guys X Ave Wage4 X 1.5 X 15

- $90

Supplies – Linen Supply Cost per $1 in Revenue X Revenue by Dept on $0.10 X $400

- $40

Supplies - Tables $.05 X $275 -$13.75

Transportation Trans. Cost per Mile X Miles60 X $0.50

- $30

Inventory Wear & Tear Purchase Price / Rental Life X Qty Rented$100 / 50 X 20 (Tables) $40 / 10 X 20

-$120$361.25 Gross Profit

Time for Questions for Jonas

$5,000 to $25,000 jobs

presented by

Lacey Wright, CERP

Case Study #1

New Year’s Eve Party:Contract #32792

Job Location: about 1 hour away

Qty

1

1

1

1

8

4

6

6

9

4

4

1

1

12

42

1

CONTRACT TOTAL $14,915.29

DELIVERY - J ACKSON Sold

DANCE FLOOR - ALL WHITE - 3'X4' Returned

*Size: 21x24Dance Floor MUST be installed on LEVEL surfaces. Celebrations will NOT shim or level ground surface on installation. Special installation arrangements must be made in advance for install on gravel, sand, decomposed granite, etc. MUST BE COVERED WHEN NOT IN USE (ie tarp, under tent, etc.)

114" X 180" - WHITE Returned

PILLOW - VARIOUS COLORS Returned

STUDIO - SQUARE OTTOMAN 22" Returned

114" X 156" - WHITE Returned

STUDIO - ROUND OTTOMAN 22" Returned

STUDIO - CORNER SECTION 30" Returned

STUDIO - MIDDLE SECTION 30" Returned

STUDIO - OTTOMAN SECTION 30" Returned

TABLE - LEG EXTENDERS 42" Returned

BAR - LIGHTED 66"x20" Returned

TABLE - BANQUET - 8' Returned

TABLE - BANQUET - 6' Returned

lighting package option three

Items Status

CUSTOM SWAGS (NOT IN OUR TENTS) Returned

Purple

CUSTOM LIGHTING PACKAGE Returned

Pickup Date: Tue 1/ 1/2013 Phone: Complete lighting package includes:

*ballroom perimeter uplighting (blue)*main bar highlighting (red or purple)*gobos (beaded pattern)

Delivery and PickupDelivery : Sat 12/29/2012 Contact:

Invoice #: 32792

Event End: Tue 1/ 1/2013 5:00PM

Invoice Date: Wed 1/ 2/2013Event Beg: Sat 12/29/2012 9:00AM

Type Date Num Source Name Memo Amount

Cost of Goods Sold

5001 · Equipment Re-Rent (Sub-rentals)

Bill 12/31/2012 123112J Lighting Company Lighting Package 3,380.00

Total 5001 · Equipment Re-Rent (Sub-rentals) 3,380.00

5011 · Travel - Direct COS

Credit Card 12/29/2012 AH Safeway lunch for install crew 25.96

Total 5011 · Travel - Direct COS 25.96

5012 · Misc. Expenses - Direct COGS

Credit Card 01/01/2013 TM Lowes bolts for the Jackson light 24.67

Total 5012 · Misc. Expenses - Direct COGS 24.67

Total COGS 3,430.63

Expense

6598 · Wages

6600 · Gross Wages

Total 6600 · Gross Wages 1,390.28

6645 · Payroll Taxes

Total 6645.1 · ETT 1.37

Total 6645.2 · SUTA 61.14

Total 6645.3 · Social Security 84.24

Total 6645.4 · Medicare Tax 19.69

Total 6645.5 · FUTA 8.16

Total 6645 · Payroll Taxes 174.60

Total Labor 1,564.88

Net Ordinary Income -4,995.51

Job Cost Report – Contract #32792

Qty

1

1

12

26

1

2

16

10

9

8

1

8

2

1

8

5

2

1

2

20

2

3

3

10

1

Qty

1

1

CONTRACT TOTAL $20,672.62

Event End: Sun 5/19/2013 6:00PM

Invoice Date: Mon 5/20/2013Event Beg: Wed 5/15/2013 9:00AM

Delivery and PickupDelivery : Wed 5/15/2013 8:00AM

Pickup Date: Sun 5/19/2013 8:00AM

Invoice #: 34999

TENT - 25 METER INTERIOR GABLE Returned

WALL CLEAR 3.4 M x 5 M (16') Returned

Items Status

PER DIEM Sold

Greenroom/ volunteers

WALL - SOLID J T 8' x 20' Returned

2- 20'X 30'

7- for exits, 5 for walls

WALL SOLID 3.4 M x 5 M (16') Returned

J UMBO TRAC - 20' X 30' Returned

LIGHTED EXIT SIGNS Returned

NO SMOKING SIGNS Returned

WALL - SOLID J T 8' x 10' Returned

6- 20'X 30' tent, 10- 2 on each 10'X 10' on 5 of the 10'X 10'

FIRE EXTINGUISHER Returned

FESTIVAL - 15' X 15' Returned

entry tent

TENT - LEGS - 10' Returned

STRUCTURE - 82' X 148' (25mX45m) Returned

TENT - BEAM CLAMP - MID BEAM Returned

4- 15'X 15', 4- 10'X 10'

WALL - SOLID J T 10' x 15' Returned

2- 2 of the 15' sides

FESTIVAL - 10' X 10' Returned

1 on 10' legs, 5- on 8' legs

WALL - SOLID J T 10' X 10' Returned

STAGE SECTION - 3'X6' - 24" HT Returned

*Size: 15x24 *Skirt (y/n): yes *Step (y/n): yesStage MUST be installed on LEVEL surfaces. Celebrations will NOT shim or level ground surface on installation.

2 on one of the 10'X 10'

21' SKIRT - BLACK Returned

17' SKIRT - BLACK Returned

HEATER - FORCED AIR - 80 Returned

EXTENSION CORDS - 100' Returned

WOODEN STEP WITHOUT RAILS Returned

HEATER - FORCED AIR - 170 Returned

TENT - EQUIPMENT Sold

FIRE PERMITS Sold

for lighted exit signs

DELIVERY - LIVERMORE Sold

Items Status

Case Study #2

Non-Profit Fundraiser:Contract #34999

Job Location: about 2 hours away

Type Date Num Source Name Memo Amount

Cost of Goods Sold

5001 · Equipment Re-Rent (Sub-rentals)

Bill 05/24/2013 77739 RentalCompany subrent skirting 127.88

Total 5001 · Equipment Re-Rent (Sub-rentals) 127.88

5010 · Equipment Rental - Direct COGS

Bill 05/31/2013 7 Equipment Company Bobcat Rental 750.00

Total 5010 · Equipment Rental - Direct COGS 750.00

5011 · Travel - Direct COS

Credit Card 05/01/2013 MW Orbitz.com Hotel Rooms 283.98

Credit Card 05/15/2013 CM Popeye's Chicken food 60.96

Credit Card 05/16/2013 CM Round Table Pizza food 80.03

Credit Card 05/19/2013 CM The Donut Shop food 24.26

Credit Card 05/19/2013 CM Rotten Robbie fuel & snacks 127.71

Check 05/22/2013 44635 Employee reimbursement - meals 82.31

Total 5011 · Travel - Direct COS 659.25

5012 · Misc. Expenses - Direct COGS

Check 04/18/2013 10338 Fire Department Fire Permits 300.00

Credit Card 05/15/2013 CM Lowes supplies 69.72

Credit Card 05/16/2013 MW Fed Ex printing occupany signs 20.39

Credit Card 05/17/2013 MW Fed Ex printing occupany signs 4.08

Total 5012 · Misc. Expenses - Direct COGS 394.19

Total COGS 1,931.32

Expense

6598 · Wages

6600 · Gross Wages

Total 6600 · Gross Wages 6,284.72

6645 · Payroll Taxes

Total 6645.1 · ETT 0.45

Total 6645.2 · SUTA 20.00

Total 6645.3 · Social Security 388.59

Total 6645.4 · Medicare Tax 90.88

Total 6645.5 · FUTA 2.66

Total 6645 · Payroll Taxes 502.58

Total Labor 6,787.30

Net Ordinary Income -8,718.62

Job Cost Report – Contract #34999

• Bidding Events

• Salesman Reviews

• Inventory Price Adjustments

• Inventory Utilization

• Adding New Product

• Education

How do we use job costing to benefit our business?

Time for Questions for Lacey

> $25,000 job

presented by

William Pretsch

Subcontracted Eq/Service 8,200 Est Generator Fuel 300

Total 8,500    

15% Profit 1,500   10,000

Rental Revenue 26,278

Subcontracted RevenueTransportationHotel/Per Diem

Total Revenue

9,990

300 0

36,568

Rental Revenue 26,278 10% Discount (2,628)

Rental Revenue 23,650 Subcontracted Revenue 9,990

Transportation 300 Hotel/Per Diem  Total Revenue 33,940

Mahaffey Tent Rentals

Job Costing Recap

Client Name & Contract #: LeRue Wedding Job Location Southwind TPC

Event Dates: 4/28/2014 Sales Person: Joshua

Installation Dates: 4/20-26/2014 Take Down Dates: 4/29-30/2014

Installation Supervisor: Walker/TJ       Take Down Supervisor: Walker/TJ

Profit (15%Rev+SCmarkup) 5,128

Commission (2.5%/5%) 676

Admin O/H 5,269 22%

BudgetAdjusted Revenue 22,868

Description Budget

Load / Unload / Washing 1,900

Equipment Expense 1,300

(additional funds) -

Subcontracted Eq/Service 8,200 Est Generator Fuel 300

Labor (Installation) 5,500 (additional funds) 1,100

Labor (Dismantle) 3,800 (additional funds) 400

Travel/Per Diem - (additional funds) -

Supplies/Misc. - Home Depot -

Transportation (Install) 150

Transportation (Dismantle) 150

Contingency -

Total Expense 22,800

Operations Summary

Client Name & Contract #: LeRue Wedding Job Location Southwind TPC

Event Dates: 4/28/2014 Sales Person: Joshua

Installation Dates: 4/20-26/2014 Take Down Dates: 4/29-30/2014

Installation Supervisor: Walker/TJ       Take Down Supervisor: Walker/TJ

Rental Revenue 26,27810% Discount (2,628)

Rental Revenue 23,650Subcontracted Revenue 9,990

Transportation 300Hotel/Per DiemTotal Revenue 33,940

Profit (15%Rev+SCmarkup) 5,128Commission (2.5%/5%) 676

Admin O/H 5,269

BudgetAdjusted Revenue 22,868

Operations Expense 22,800 Add'l Profit/Exp 68

Total Profit/Loss 5,196 % 15%

Description Budget Actual Variance % of Rev

Load / Unload / Washing 1,900 3,019 (1,119)

Equipment Expense 1,300 2,216 (916)

(additional funds) - -

Subcontracted Eq/Service 8,200 8,455 45 Est Generator Fuel 300

Labor (Installation) 5,500 9,464 (2,864) 40%(additional funds) 1,100 -

Labor (Dismantle) 3,800 4,138 62 17%(additional funds) 400 -

Travel/Per Diem - - - (additional funds) - -

Supplies/Misc. - Home Depot - 373 (373)

Transportation (Install) 150 685 (535)

Transportation (Dismantle) 150 225 (75)

Contingency -

Total Expense 22,800 28,575 (5,775)

Operations Summary

Client Name & Contract #: LeRue Wedding Job Location Southwind TPC

Event Dates: 4/28/2014 Sales Person: Joshua

Installation Dates: 4/20-26/2014 Take Down Dates: 4/29-30/2014

Installation Supervisor: Walker/TJ       Take Down Supervisor: Walker/TJ

Rental Revenue 26,27810% Discount (2,628)

Rental Revenue 23,650Subcontracted Revenue 9,990

Transportation 300Hotel/Per DiemTotal Revenue 33,940

Profit (15%Rev+SCmarkup) 5,128Commission (2.5%/5%) 676

Admin O/H 5,269 22%

Budget ActualAdjusted Revenue 22,868 22,868

Operations Expense 22,800 28,575Add'l Profit/Exp 68 (5,707)

Total Profit/Loss 5,196 (580)% 15% -2%

Successful Job:Profitable ______

Referral/Testimonial ______Rebook ______

Lessons Learned: --never give 10% discount for "large volume order" --failed to account for overtime wage rates on set up --rented forklift to access backyard - didn't budget delivery costs --rental went +2days waiting for muddy site to dry before down --hectic week, rented truck since ours was here every day --should have added 3-5% contingency for unforseen expenses --muddy site required extra time to wash fabric after job

• BIG jobs aren’t always good jobs• Qualify the client• Know the opportunity costs• Beware of EGO• Sub-rent for profitable growth• What could possibly go wrong?• Control your destiny

Lessons Learned:

Time for Questions for William

Time for Overall Questions

Next Session

6 p.m. – 8 p.m.Café Tu Tu Tango

Shuttle service from all Show hotels except those within walking distance.

Advance registration and ticket required.

Reception

Room S320 Keynote Address Susan Southerland